Currencies Slide

“Sell in May and Go Away” has been bandied about for many years. It is long since a poor strategy for equity investors in the US. Lately, we have seen an unusually resilient demand for US equity risk – especially in light of rising rates and global risks. May was strong. Crypto asset holders look to be the bunch most interested in the sell in May thesis. At least this May. The last month has been hard on valuations across the Blockchain world. We decided to check in on the space and see how it compares to a recent volatile run in FX markets.

There is no denying that the halcyon days of 2017 are over for Crypto assets. Likewise these days’ good times, including the suspension of rational assessment, seems to have migrated to equities. Particularly US equities look heady, to say the least. It is almost as though assets inflate and deflate. Which assets? Almost any, currencies too, Crypto and traditional State-issued.

The real lesson is that speculative attention generates heat and buzz. This drives commentary and momentum builds momentum. This is much celebrated and lamented in Blockchains assets. It is also true in other assets.

Asset

(Coinbase) Move 12 May – 12 June

Bitcoin

-22%

Bitcoin Cash

-37%

Ethereum

-28%

Litecoin

-27%

FX markets trade 6 to 10 times the daily volume of BTC, but the total value in play is over 100x. We have seen a lot of volatility with dramatic moves in the Turkish Lira, Argentine Peso, Mexican Peso, South African Rand and Russian Ruble. Currencies, fiat and Crypto, old and new, regulated and not so regulated, have been very volatile over the last few months. It makes sense that rising interest rates and political risk are beginning to make waves in various asset markets.

Asset

% Move May 11 – June 11

Argentine Peso/USD

-11.0%

Turkish Lira/USD

-6.0%

Mexican Peso/USD

-5.5%

Russian Ruble/USD

-1.6%

South African Rand/USD

-8.0%

So, what are you getting at?

The tech is new and the possibilities are broad, deep, and exciting. The pattern of trade, up down and volatile, is business as usual. Maybe, just maybe, we can start looking at what makes Blockchain different? We see that as decentralizing concentrated market power, broadening the user tent, doing things faster, cheaper and more transparently.